Tata Chemicals Limited announces unaudited financial results for FY 2003
April 29, 2003

Announcing the results for FY 2003, Prasad Menon, Managing Director, Tata Chemicals, said, "We have strengthened our position across all our core businesses. Aggressive marketing and operating strategies, a continued focus on enhancing operational efficiencies and prudent financial management have contributed towards the company taking significant steps towards its mission of attaining unassailable cost levels and becoming globally competitive in all its product and service offerings. We have built a robust business model that makes me confident of Tata Chemicals continuing to deliver stakeholder value "

Highlights: Financial performance for FY 2003

FY 2003 (April 2002-March 2003) vs FY 2002 (April 2001-March 2002)

	Income from operations higher by 14 per cent at Rs 1,628 crore compared with Rs 1,434 crore.
	Operating profits increase by 11 per cent to Rs. 417 crore from Rs 376 crore.
	Multiple financial initiatives including restructuring of debt reduces net interest cost by 18 per cent to Rs 90 crore from Rs 110 crore. The amount of Rs 90 crore is inclusive of prepayment premium of Rs 5 crore paid towards retirement of high cost debt.
	Profit before tax increases 35 per cent to Rs 269 crore from Rs 200 crore.
	Profit after tax improves 55 per cent to Rs 197 crore compared with Rs 127 crore. Tax provision is lower on account of adjustment of deferred tax provision by Rs 19 crore in FY 2003.

Q4 FY 2003 (January-March 2003) vs Q4 FY 2002 (January-March 2002)

	Income from operations rise 3 per cent to 379 crore from Rs 368 crore.
	Operating profits higher by 18 per cent at Rs 79 crore from Rs 67 crore. Improved Q4 FY 2003 financial performance despite notification dated April 16, 2003 revising the retention price of urea. The impact of this announcement (Rs 15 crore) is attributable to all four financial quarters of FY 2003 but has been accounted for in Q4 FY 2003.
	Profit before tax lower by 10 per cent at Rs 61 crore compared to Rs 67 crore. Decline in pre-tax Q4 FY 2003 financial performance attributable to higher interest on tax refund received in Q4 FY02 — Rs 47 crore against Rs 24 crore in Q4 FY 2003.
	Profit after tax improves 150 per cent to Rs 60 crore compared with Rs 24 crore. Tax provision is lower on account of adjustment of deferred tax provision by Rs 13 crore in FY 2003.

Financial management perspective

Multiple initiatives that include debt retirement and derivative tools directly contributes to earnings:
	Weighted average cost of borrowings reduces to 9.7 per cent in FY 2003 from 11.2 per cent in FY 2002.
	Efficient capital utilisation and judicious capital deployment combine to deliver interest savings of Rs 20 crore.
	Debt reduced to Rs 820 crore as on March 31, 2003, from Rs 1060 crore as on March 31, 2002.

Business perspective
All the company's core businesses — inorganic chemicals, salt and urea — have demonstrated healthy growth in FY 2003.

Highlights: Business and operations for FY 2003

Soda ash business

	Maintains leadership position despite new entrants and capacity expansion in the sector; current marketshare at 34.3 per cent.
	Total sales of soda ash grow to 659,447 MT in FY 2003 from 545,943 MT in FY 2002
	Efficiency-led project Manthan delivers Rs 40 crore savings across manufacturing and marketing functions.
	Strong export thrust enables efficient capacity utilisation, low inventory levels and sustains drive towards objective of becoming a leading international player within the sector. Exports of 101,000 MT in FY 2003, 197 per cent higher than in FY 2002.
	Multiple initiatives contribute to improved operational efficiencies:
		Efficiency-led project Manthan delivers Rs 40 crore savings across manufacturing and marketing functions.
		Enhanced packing solutions minimises quality constraints.
		Innovative logistical models improves margins.

Salt business

	The business continues to be a strong contributor towards business growth as well as a key category driver, with a leading 38 per cent market share of the national branded segment. This was equal to the combined shares of the next three players.
	Revamped sales and distribution infrastructure to increase thrust on higher potential locations and achieve greater market penetration.
	Institutional sales managers and additional area sales managers appointed to strengthen presence in South India. Results already visible with company attaining leadership position in Tamil Nadu.

Urea business

	Maintained leadership position as one of the world's most efficient producers.
	Inventory levels at an all time low in a drought year, signifying TCL's arrival as a brand and high acceptance among farmers.
	Well-entrenched Tata Kisan Kendra network contributes to increased trading volumes. Traded sales amounting to Rs 51 crore achieved in FY 2003.
	Proposed HLCL merger expected to contribute to enhanced operating synergies, expanded geographical presence and larger product portfolio.
	Integration of Rallis marketing infrastructure into Tata Chemicals complete.

Outlook for FY 2004

	Improved efficiencies through Manthan and other cost reduction initiatives, strengthening market and customer-centric thrust, continued entry into regional exports markets and the introduction of innovative products and services will continue to drive operating growth.
	The proposed HLCL merger is expected to provide further impetus to business growth and performance in FY 2004.

Some of the statements in this document that are not historical facts are forward looking statements. These statements are based on the present business environment and regulatory framework. We assume no responsibility for any action taken based on the said information, or to update the same as circumstances change.